Vedanta Bond Sale Shows Demand for Indian Assets

Bond investors continue to gobble up Indian assets in their hunger for yields.

On Thursday, London-listed Vedanta Resources PLC successfully sold junk bonds worth $1.7 billion – its first U.S. dollar bond offering in two years.

Though the miner is based in London, it has majority of its assets in India, in companies like Sesa Goa Ltd Cairn India Ltd. and Sterlite Industries Ltd. As a result, many investors consider it an Indian company.

Vedanta’s deal comes on the heels of India’s first junk bond deal earlier this month when Rolta India Ltd, which provides software to help engineering design, sold $200 million worth of bonds.

Vedanta sold its bonds in two tranches–$1.2 billion worth of bonds maturing in January 2019, were priced at 6%, while another $500 million of 10-year paper was priced at 7.125%.

Thanks to large investor appetite, the company said in a press release, it got a better deal than its initial expectation.

The company has a rating of Ba3 by Moody’s, BB each by Standard and Poor’s and Fitch. According to Moody’s, its rating indicates major ongoing uncertainties to adverse business, financial and economic conditions.

Rajiv Nayar, head of capital markets origination at the Indian unit of Citigroup, said more such high-yield debt from India should be expected because of strong appetite by international investors for such securities. Also, Indian issuers are increasingly looking to the U.S. to diversify their investor base, he said.

Vedanta said it will use the fund raised from this issue to refinance existing debt and for general corporate purposes.